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3 Things Your Loyalty Program Needs for Effective Customer Engagement

The massive increase in mobile app use and customer loyalty programs over the past year is remarkable — and it’s something all businesses should take note of.

Our retail customers’ apps saw an 800% increase in app traffic early in the COVID-19 pandemic. Starbucks, whose loyalty program was already popular years before COVID-19, saw a 15% increase in user participation year-over-year in Q1, a record high.

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These signs indicate apps and loyalty programs are no longer optional for brands, but essential. In fact, in a recent poll, 70% of consumers said their connection to a rewards program is one of the most important factors for them to continue using a mobile app after the pandemic is over.

To meet this demand and win over competitors, businesses need to retool their loyalty programs and apps to provide the personalization and benefits customers desire.

Not all apps are created equal

Years ago, mobile apps were less of a critical part of a brand’s customer experience. Brands could skate by with a subpar experience. The mere fact that any brand would offer a mobile app for shopping or ordering food was novel enough. But those days are over.

For example, today, one-third to one-half of new users on mobile food ordering apps aren’t satisfied with their experience. This type of sentiment should be worrisome for restaurants on these apps — it opens the door for your customers to jump ship to competitors that offer a superior app and loyalty program experience.

But from a broader perspective, customer dissatisfaction with apps doesn’t come as a surprise. Many companies rely on third-party apps for their delivery and online shopping offerings. These apps, while a suitable plug-and-play option, siphon profits from businesses in the form of marketplace fees. Third-party options also put the customer experience in the hands of the platform, not your brand. So, even if you aren‘t at fault for a problem caused by the third-party provider, it’s still associated with your brand in the customer’s mind.

Third-party app providers also shield access to valuable first-party data from your business. Without access to first-party data, you can’t customize offerings or rewards based on the activity of your app users. This gap can leave countless revenue opportunities, like personalized reward redemptions and upsells, on the table.

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Putting the customer experience in your own (digital) hands

To grow your business through online offerings, you need to create a loyalty program that digitally builds on the relationships you have with customers. Today’s consumers want a loyalty program that goes beyond a discount at the register and speaks to their personal preferences and shopping habits. Here are three components your loyalty program should include to maximize customer engagement and provide a personalized digital experience.

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An original app design

If you currently use a third-party app or are starting a loyalty program from scratch, take control of the customer experience by creating your own app. By hiring a digital consultant or in-house app developer, you can build an app that’s customized to the needs of your business. This approach also unlocks a critical factor to a successful loyalty program: customer app usage data.

With customer app usage data, you lay the foundation to create a personalized customer experience based on purchasing patterns and user activity. You can also access information like ratings and reviews to gather insights on products and services to see what’s resonating with customers, and what’s not.

Personalized rewards

Customer data access can support personalized loyalty program rewards for your customers. Insight into what an individual customer purchases and which areas of your app they frequent are opportunities for one-on-one interaction.

Each individual reward or offer should have a strategy behind it. Let’s say you run a restaurant and have a customer who consistently orders spicy chicken sandwiches on your app. With the help of AI, you can send that customer a personalized reward for a free spicy chicken sandwich. Or if you’re a clothing retailer, you can leverage AI to send a discount offer code for an item a customer consistently views on your app.

Through personalized rewards and interactions that are meaningful to customers, you can build one-on-one relationships that foster brand loyalty and ultimately make customers happy. And the more satisfied your customers are, the more likely they are to repeatedly come back and interact with your business.

Cross-channel flexibility

To create a unified and inclusive customer experience, ensure your loyalty program is accessible across multiple channels.

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If your loyalty program is too exclusive (e.g., only accessible via mobile app), then it can create a significant friction point for customers. What if a customer doesn’t have a smartphone? Or what if they only shop through your website? Enable your program and rewards to be accessible to customers no matter where they are, whether it’s on their phone, laptop, or at your store locations.

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The digital transformation of the customer experience prompted by COVID-19 gives your business the opportunity to build deeper loyalty among customers. By taking ownership of your customer loyalty program, personalizing awards, and enabling cross-channel loyalty program access, you can provide the digital-first customer experience people crave.

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